If you were looking to buy a company, what would it be? Shake Shack? Maybe Instacart?
This isn't a Christmas in July wish list because neither Shake Shack nor Instacart is up for sale.
One strategist, however, has identified those companies as possible targets in a hot takeover environment.
For investors looking to cash in on this year's record merger boom, with $2.6 trillion worth of transactions announced in the first half of 2026, the key is to find stocks that might look attractive to an acquirer but will also do just fine if they remain independent. What to look for is high revenue growth.
Chris Senyek, chief investment strategist at Wolfe Research, and his team run monthly screens to identify possible targets. One of Senyek's screens searches for small and midsize companies that have reported sales growth of at least 10% over the past 12 months and are expected to post double-digit top-line gains for the next 12 months as well.
So who made it through Senyek's screen? Several well-known consumer companies are on the list, including Dutch Bros, CAVA Group, Shake Shack, Texas Roadhouse, Celsius Group and Instacart. Fintechs Lemonade, Dave, SoFi and Toast also made the cut.
None of the companies that came up in this screen is on the shopping block per se; they simply fit Senyek's criteria as companies that could be attractive to buyers because of their healthy prospects. And larger firms should be in the mood to do more deals thanks to the strong gains for the major market indexes this year.
"We expect M&A to remain strong as strategic buyers look to support growth and/or companies look to cash in on potentially inflated stock prices," Senyek and his team wrote.
More mergers among brand-name consumer companies seem likely. There have already been some notable consumer deals this year, with shareholders of Tylenol maker Kenvue agreeing to be bought by Kleenex owner Kimberly-Clark and spice maker McCormick announcing plans to purchase Unilever's food business.
As for financials, larger banks are looking for new revenue streams and mergers are one way to accomplish that. Capital One bought privately held corporate credit card fintech Brex earlier this year for more than $5 billion. And two big regional bank deals announced late last year also closed in early 2026 -- Fifth Third's acquisition of Comerica and Pinnacle Financial's merger with Synovus.
"As we look to the second half of 2026, we expect a pickup in dealmaking, as banks, insurers and asset managers increasingly look to M&A to achieve competitive growth and transformation," said Omar Ali, global financial services leader for consulting firm EY in a midyear report.
There's another sector that should remain a hotbed for deals in the second half of the year as well: biotech. Larger pharmaceutical firms have been busy making purchases this year to try to bolster their drug pipelines. In fact, Vertex Pharmaceuticals said late Monday that it had agreed to acquire biotech company Crinetics Pharmaceuticals, which focuses on endocrine diseases, for $10 billion.
Numerous small and midsize biotechs made it through Senyek's screen for companies with strong sales growth that could be attractive takeover targets, including Legend Biotech, Krystal Biotech, Arcutis Biotherapeutics, Mirum Pharmaceuticals, Neurocrine Biosciences and BioMarin Pharmaceutical.
The good news for investors is that all of these stocks still offer solid growth potential even if they remain independent. Future gains aren't dependent on these companies getting bought out for a premium. But the fact that they all could be tempting targets for larger firms looking for ways to boost their sales doesn't hurt.
Write to Paul R. La Monica at paul.lamonica@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 08, 2026 03:00 ET (07:00 GMT)
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